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EMERGING MARKETS-Brazil assets rise on expected interest rate cut; Latam stocks rise

By Ambar Warrick

* MSCI Latam stocks, currency indexes at over 1-mth highs * Brazil cut priced in, tightening cycle seen in 2020- Analyst * Higher metal prices support Chilean assets By Ambar Warrick Dec 11 (Reuters) - Brazilian assets firmed on Wednesday on expectations the country's central bank will cut the benchmark Selic interest rate to a record low 4.5%, while Latin American stocks hit the highest in more than a month on hopes for U.S.-China trade talks. Regional markets were cautiously optimistic as reports suggested Washington was laying the groundwork to delay the latest tariffs against Chinese goods scheduled to take effect Dec. 15 deadline. "Until we see some confirmation, I think we'll see people getting a bit more nervous as that deadline nears," said William Jackson, chief emerging markets economist at Capital Economics in London. Markets were also anticipating the U.S. Federal Reserve would conclude its final meeting in 2019 by standing pat on rates. Brazil stocks rose while the real rose against the dollar to its strongest level in more than a month. Analysts believe markets have priced in what is expected to be the final rate cut of Brazil's current cycle. "The reason they're cutting rates is that the economy has been weakened, and now finally there's been a bit of a turnaround in some of the economic data and I think there's a bit more optimism," Capital Economics' Jackson added. "Financial markets at the moment seem to be expecting a tightening cycle from the second half of next year -- if the central bank downplays, or plays up expectations for that, it could shift the real one way or the other." The MSCI's index of Latin American stocks rose to the highest in more than a month, propped up chiefly by Brazilian stocks. Chilean equities rose to a three-week high, with steel producer CAP SA leading gains on the benchmark index, boosted by a jump in Chinese iron ore futures as increased bank lending in the country spurred hopes for demand. Chile's peso also firmed to the dollar, taking support from increased prices for copper, the country's top export. The Mexican peso and the Colombian peso both strengthened, while the MSCI's index of Latin American currencies touched the highest in more than a month. Key Latin American stock indexes and currencies at 0208 GMT Stock indexes Latest Daily % change MSCI Emerging Markets 1056.40 0.66 MSCI LatAm 2766.73 0.62 Brazil Bovespa 110817.51 0.13 Mexico IPC - - Chile IPSA 4800.73 0.86 Argentina MerVal - - Colombia COLCAP 1602.94 0 Currencies Latest Daily % change Brazil real 4.1176 0.73 Mexico peso 19.2153 0.20 Chile peso 772.9 0.72 Colombia peso 3391.45 0.36 Peru sol 3.3918 0.21 Argentina peso 59.7000 0.25 (interbank) (Reporting by Ambar Warrick in Bengaluru; Editing by David Gregorio)